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mortgage arrears and charges

If someone doesn’t keep up with their mortgage payments, their account will fall into arrears. When this happens, the mortgage company is likely to apply extra charges on top of their monthly payments.

We hear from people who feel their mortgage company hasn’t treated them fairly when they’ve fallen into difficulties - or who are unhappy with the arrears charges the lender has applied.

senior ombudsman

We see situations that might have been far less serious and stressful if people had told their mortgage company sooner that they were struggling. We can signpost people to organisations offering free debt advice - who can give them the support they need to get things back on track. But to stop things getting to that point, it's essential that people are open and honest if they're having trouble - and that lenders respond constructively as soon as they know.

need to know

If someone's told their mortgage company they're struggling, the mortgage company has a responsibility to respond sympathetically and constructively. We'll check they've taken their customer's individual circumstances into account, rather than taking a "one size fits all" approach.

Depending on the circumstances, we might say it's fair to put in place a reduced payment plan or a repayment holiday - or to allow someone to pay only the interest on their mortgage for a certain period of time. If a lender has caused unnecessary upset, we can tell them to compensate their customer.

There may be costs involved in managing accounts in arrears, so we won't necessarily say that arrears charges are unfair. But we may decide they're unfair if someone's kept to an agreed repayment arrangement - or if it's unlikely they'll ever be able to make their mortgage repayments.

If we decide charges have been applied unfairly, we can tell a mortgage company to refund them. These types of situations can be very distressing - and if a mortgage company's mistake has caused unnecessary upset, we can tell them to pay compensation.